TORONTO – The Canadian dollar was down sharply Tuesday but well off early lows after an escalating nuclear crisis in Japan roiled currency and equity markets around the world.

The dollar fell 1.17 cents to 101.65 cents US after earlier plunging as low as 100.26 cents.

The sell-off started overnight in Japan after the country’s prime minister announced that radioactive material had leaked from the Fukushima Dai-ichi nuclear plant in Fukushima province and that more leaks were possible.

Dangerous levels of radiation forced the government to order 140,000 people to stay indoors.

The loonie’s decline mirrored the sell-off on equity markets as Japan’s benchmark Nikkei 225 stock average plunged more than 1,000 points, or 11 per cent.

Stock markets in Toronto and New York were well off the worst levels of the session but still down about 1.5 per cent.

“We’ve seen that the nuclear risk has risen and markets are very much in risk-off mode so that means the U.S. dollar is significantly stronger and currencies like Canada have lost ground,” said Camilla Sutton, chief currency strategist at Scotia Capital.

The Canadian dollar was in good company with many other currencies also lower.

“Australia is actually one of the worst hit because Australia has a significant exposure to the Asian growth story,” added Sutton.

“And what we’re seeing is the market is repricing the outlook for Asian growth so thinking that Japan, being the third-largest economy in the world, it’s going to put some downward pressure on global growth.”

The flight from risk sent commodity prices reeling, although oil, gold and copper were also off session lows.

The April crude contract on the New York Mercantile Exchange lost $3.08 to US$98.11 a barrel. Prices had already been under pressure on concerns that Japan will be using much less oil because of the economic impact of the catastrophe.

Demand concerns pushed copper down five cents to US$4.14, far below recent highs of more than US$4.60 a pound.

Bullion prices also retreated with the April contract in New York down $21.60 at US$1,403.30 an ounce.

This sort of volatility won’t be a one-day event “and that’s part of what the market is grappling with,” Sutton said.

“It’s very hard to quantify what’s transpiring and very hard to quantify the risk in the system and there”s a tremendous amount of misinformation circulating about.”